At least $5.5 mil of corporate welfare
Recently, the Knox County Commission unanimously passed a $7.1M Tax Increment Financing (TIF) package for the Biddle Farm development in Farragut. This approval allows the developer to seek funding through bonds using the increases in post-development property taxes that would normally be paid to Knox County over the next 20 years.
These funds can be used to pay capital costs for public infrastructure, costs for obtaining permits, capitalized interest, premiums for payment and performance bonds, professional fees for architectural and engineering services, legal expenses capitalized as Project costs, acquisition costs for equipment and fees and expenses of the Board and other fees and expenses related to the TIF.
The property in question included a mostly vacant former grocery store and multiple acres of vacant farmland. The underlying reasoning for the approval was that the commercial building was blighted, a valid reason for use of TIF.
However, in reviewing the TIF amount, 77 percent of the $7.1M comes from the residential portion of the development. This includes a high-end apartment complex and townhomes with an expected cost between $600K and $800K each.
In paragraph 4.7, the Knox County Industrial Development Board guidance states, “In the absence of unusual or extenuating circumstances acceptable to the board, Projects that are substantially residential will not qualify for tax increment financing under the Board’s TIF Program.” I have asked what these unusual or extenuating circumstances were, but have not received an answer from my commissioner or the County Industrial Development Board.
The $1.6M portion of the TIF calculated from the commercial portion of the property may be acceptable. The remaining $5.5M appears to be corporate welfare for a high-end development in one of the most affluent areas of Knoxville. It is disappointing that these funds will not be used to pay for schools, the KCSO and other county services.
Michael Wilson, Farragut